Hire Purchase

Jewel_2

Hi there

We are thinking of 'buying' a car and thought for our circumstances Hire Purchase would be the best bet. We both have excellent credit ratings, but a load of debt which doesn't add up against our income in theory (we bring in over £5000 a month, but some of this is child maintenance, contract work etc). So, if potentially anyone did a credit check on us we would be turned down for credit.

Can someone explain whether a HP agreement requires a credit check? Is it a reasonable way of obtaining credit or is it seen as a last resort? Will it show as a debt on our credit rating? We really don't want to be seen to be in more debt at this stage, even though we can definitely afford repayments.

If this isn't a good idea, anyone got any? We have a landrover at the moment which we are going to sell to pay off a chunk of debt (really expensive to run too!).

Cheers x

CLAPTON

Why not spend some of the money from the sale of the landrover to buy a cheap car with low running costs?

With a very good income I would have thought you should concentrate on paying off the debts and not incurring new ones.

And I see no logic in getting a new debt on HP then using the money from the landrover to pay off other debt unless there is a large difference in the APRs of the debts.

Jewel_2

We're trying to get our debts down on paper so that we can acquire sensible borrowing power to pay off the debts. Does an HP 'loan' show as a debt on a credit rating?

inmypocketnottheirs

Sorry Jewel, but you really are not making sense here! Re-read Claptons post and concentrate on getting your debts down. Visit the debtfreewannabe section and post a statement of affairs so you outgoings can be reduced. Then after freeing up some income, then you can look at how to finance another vehicle.

HP is only a method of finance, and will show on your credit reports the same way as any other loan or finance.

HTH

CLAPTON

Borrowing doesn't pay off debt it simply shifts it around.

you need to be thinking about a cheap car to maximise the amount you can pay off on your debts

try listing each debt in turn, give the APR and the minimum monthly payment.

obviously use any spare money to pay off the highest APR first
also consider if you can get a low Life of balance CC and shift some of the highest APRs to it.

But getting new debts is not the answer.

HP is a loan and will show on your credit record.